The League of Monetary Cranks…
…has been established by Scott Sumner, my favorite new blogger. In his latest post, he points out that the author of the leading monetary textbook, Mishkin, is in fact a “monetary crank” because “[t]he sine qua non of a monetary crank is the bizarre belief that even depressions featuring zero interest rates can be magically cured by printing money.”
Exactly. Mishkin–and all other orthodox theorists operating within the aggregate demand paradigm, and that includes most Chicago school guys as well as MIT’ers–are indeed monetary cranks. The WSJ op ed pages, as well as blogs that promise to make the world better through small steps, are chock full of the idea that printing green pieces of paper can help the economy re-coordinate itself after a massive disruption in the physical capital structure. What cranks!
The funny part, of course, is that Sumner is merely trying to show that his own theory–that the Fed caused the crisis by being far too restrictive up until last September–is actually very close to orthodox opinion. So Sumner is really saying, “You’re calling me nuts? Look, if I’m nuts, then everybody in the profession is nuts!”
That’s right, Dr. Sumner, welcome to the Austrian’s world.
